Grapevine

How CBK rate hikes impact Treasury's emergency loans

Central Bank of Kenya Governor Dr Kamau Thugge. [File, Standard]

The high cost of borrowing following successive hikes of the Central Bank Rate (CBR) has seen the interest rates on emergency loans that the National Treasury takes from the Central Bank of Kenya (CBK) nearly double.

Interest rates on the government's overdraft facility, through which Treasury borrows directly from CBK to meet pressing financial needs, including debt repayment, increased by 87 per cent over the financial year to June 2024, according to a new report by the Controller of Budget (COB).

Treasury paid Sh9.63 billion as interest over the last financial year compared to a charge of Sh5.16 billion in the year to June 2023.

This was a result of the hike in the CBR, which went up from nine per cent in June 2023 to 13 per cent by the end of the 2023-24 financial year last June.